On LinkedIn, Don Peppers is sharing his perspective on making better decisions with data. This got me thinking and I want to share with you what showed up for me. Why listen to my speaking? I do have a scientific background (BSc Applied Physics). I qualified as a chartered accountant and was involved in producing all kinds of reports for managers and saw what they did or did not do with them. More recently, I was the head of a data mining and predictive analytics practice. Let’s start.
Data and data driven decision-making tools are not enough
Yes, there is a data deluge, and this deluge is becoming down faster and faster. Big enough and fast enough to be given the catchy name Big Data. What is forgotten is the effort that it takes to get this data fit for the purpose of modelling. This is no easy-cheap task. Yet, it can be done if you throw enough resources at it.
Yes, there are all kinds of tools for finding patterns in this data. And in the hands of the right people (statistically trained-minded, business savvy) these tools can be used to turn data into valuable (actionable) insight. This is not as easy as it sounds. Why? Because there is shortage of these statistically trained and minded people: amateurs will not do, experts are necessary to distinguish between gold and fools gold – given enough data you can find just about any pattern. It statistical savvy is not enough you have to couple it with business savvy. Nonetheless, let’s assume that we can overcome this constraint.
The real challenge in generating data driven decision-making in businesses is the cultural practices. We do not have the cultural practices that create the space for data driven decision-making to show up and flourish. A thinker much smarter-wiser than me has already shared his wisdom, I invite you to listen:
On the whole, scientific methods are at least as important as any other research: for it is upon the insight into the method that the scientific spirit depends: and if these methods are lost, then all the results of science could not prevent a renewed triumph of superstition and nonsense.
Clever people may learn as much as they wish of the results of science – still one will always notice in their conversation, and especially in their hypotheses, that they lack the scientific spirit; they do not have the distinctive mistrust of the aberrations of thought which through long training are deeply rooted in the soul of every scientific person. They are content to find any hypothesis at all concerning some matter; then they are all fire and for it and think that is enough …….. If something is unexplained, the grow hot over the first notion that comes into their heads and looks like an explanation ….
- Nietzsche (Human, All Too Human)
It occurs to me that the scientific method never took route in organisational life. Put aside the rationalist ideology and take a good look at what goes in business including how decisions are made. I say you will find that Nietzsche penetrating insight into the human condition as true today as when he spoke it. The practice of making decisions in every organisation that I have ever come in contact with is not scientific: it does not follow the scientific method. On the contrary, managers make decisions that are in alignment with their intuition, their prejudices, and their self-interest. It is so rare to come across a manager (and organisation) that makes decisions using the scientific method that when this does occur I am stopped in my tracks. It is the same kind of unexpectedness as seeing a female streaker running across the football pitch in a league match.
What are the challenges in putting data driven decision-making practices into place in organisations?
Technologists have a gift. What gift? The gift of not understanding, deeply enough, the being of human beings. Lacking this understanding they can and do (confidently) stand up and preach the virtues-benefits of technology. If life were that simple.
Truth shows up as attractive to those of us who do not have to face the consequences of truth. Data driven decision-making sounds great for those of us selling (making a living and hoping to get rich) data driven tools and services.
The challenge of putting in place data driven decision-making practices is that it disturbs the status quo. When you disturb the status quo you go up against the powerful who benefit from that status quo. Remember Socrates:
The very nature of what Socrates did made him a disruptive and subversive influence. He was teaching people to question everything, and he was exposing the ignorance of individuals in power and authority. He became much loved but also much hated …. In the end the authorities arrested him for …., and not believing in the gods of the city. He was tried and condemned to die …
- Bryan Magee, Professor
Beware of being successful in putting in place a culture of data driven decision making!
With sufficient commitment and investment you can put in place a data driven decision making culture. Like the folks at Tesco did. And by making decisions through harnessing the data on your customers, your stores, your products, you can outdo all of your competitors, grow like crazy and make bumper profits. Again, again, and again. Then the day of reckoning comes – when you come face to face with the flaws of making decisions solely on the basis of data.
Tesco is not doing so great. It has not been doing so great for several years – including issuing its first ever profits alert in 2012. What is the latest situation? Tesco has reported a 23.5% drop in profits in the first half of this year. What has Tesco been doing to deal with the situation? This is what the article says:
Last year, Tesco announced it would be spending £1bn on improving its stores in the UK, investing in shop upgrades, product ranges, more staff, as well as its online offering.
There are a number of flaws on data driven decision making. For one data driven decision making assumes that the future will be a continuation of the past. Which is rather like saying all the swans that we have come across are white, so we should plan for white swans. And then, one day you find that the black swan shows up! The recession and the shift in consumer behaviour that resulted from this recession was the black swan for Tesco.
Furthermore, I hazard a guess that in their adoration at the pulpit of data driven decision making the folks at Tesco forgot the dimensions that matter but were not fed into the data and the predictive models. What dimensions? Like the customer’s experience of shopping at Tesco stores: not enough staff, unhappy staff, stores looking more and more dated by the day, the quality of their products ……
It looks like the folks at Tesco did not heed the sage words of one of my idols:
Not everything that counts can be counted, and not everything that can be counted counts.
What Is The Achilles Heel of Strategy?
My colleague and I put our whole selves into our work talking with folks in the business, listening to customer conversations, reviewing research, looking at competitors and trends, looking at various approaches, evaluating these approaches and coming up with optimal course of action for our client and our client’s customers.
To our delight the strategy was accepted-approved by management. A month or so later we got busy on implementation planning. It was during the implementation planning when hard decisions had to be made that the commitment to the digital strategy unravelled. Our clients got the value of pursuing the digital strategy and they found themselves in a particular situation which called forth and drove a different set of choice and actions.
This is the Achilles Heel of strategy, every executive finds himself in a particular situation. And every situation has its own ‘logic’ and a momentum. As such it really it takes something to alter course and make any significant headway. It takes resolve – fierce resolve, the kind of resolve that grabs you and keeps hold of you. It is not the kind of resolve that is created through the intellect.
Why Don’t We Do What We Know We Should Do?
Have you wondered why your organisation sucks at being authentically customer-centric: practicing relationship marketing, client centred selling, pleasing customer service? Have you wondered why it is that your organisation sucks at calling forth the best from your people?
Now and then someone speaks and their speaking is wisdom. Today, I share with you the wisdom of David Maister as articulated in his great book ‘Strategy and the Fat Smoker‘:
“In business, strategic plans are also stuffed with familiar goals: build client relationships, act like team players, and provide fulfilling motivating careers. We want the benefits of these things. We know what to do, we know why we should do it, and we know how to do it. Yet most businesses and individuals don’t do what’s good for them….
The primary reason we do not work at behaviours which we know we need to improve is that the rewards … are in the future; the disruption, discomfort and discipline needed to get their are immediate…..
Our default pattern and why it doesn’t work
When it comes to improving performance at the individual, team or organisational level we tend to follow a self-defeating pattern. I have seen this pattern played out again and again over the last 10+ years as organisations have grappled with relationship marketing, CRM, customer experience, employee engagement, digital. Here’s what David Maister says:
We start self-improvement programs with good intentions, but if they don’t pay off immediately, or if a temptation to depart from the program arises, we abandon our efforts completely – until the next time we pretend to be on the program.
That’s our pattern. Try a little, succumb to temptation, and give up. Repeat until totally frustrated. Unfortunately, there is rarely, if ever, a benefit from dabbling or trying only a little. You can’t get half the benefits of a better marriage by cutting out half your affairs, cure half the problems of alcoholism by cutting out half the drinks or reduce the risks of lung cancer by cutting out half the cigarettes.
You can’t achieve competitive differentiation through things you do “reasonably well most of the time.” You not only cannot dabble, but you also cannot have short-term strategies ….. The pursuit of short-term goals is inherently anti-strategic and self-defeating.
You are either seriously on the program, really living what you have chosen, or you are wasting your time.
Why strategic analysis and listening to customers is not the answer
I worked in an organisation which expended considerably time-effort-cost in doing NPS quarterly. We had access to the voice of the customer. And the voice tended to speak the same tune quarter after quarter. Why? Because the people in the organisation were not willing to change behaviour in any significant way.
Is it possible that setting up VoC listening programs are a ruse? A way of saying to yourself and others that you are serious about improving the customer experience so that you hide your unwillingness to change your behaviour, the behaviour of your team, your organisation? What does David Maister say?
Improving the quality of the analysis is not where the problem lies. The necessary outcome of strategic planning is not analytical insight but resolve.
What are the essential questions of strategy?
If we know the why-what-how of employee engagement, meaningful customer relationships, and customer loyalty then what are the strategic question? Here’s what David Maister says:
The essential questions of strategy are these:
 Which of our habits are we really prepared to change, permanently and forever?
 Which lifestyle changes are we really prepared to make?
 What issues are we really ready to tackle?
Now that’s a different tone of conversation and discussion (and the reason that real debate is so often avoided).
What am I getting at here?
To come up with products that enrich the lives of customers requires resolve, analysis is insufficient. To create-deliver truly personalised-relevent marketing requires resolve, analysis and marketing technology are insufficient. To call forth the kind of service that generates gratitude from customers and makes them feel good about doing business with your organisation requires resolve, analysis-outsourcing-technology are insufficient. To orchestrate an end to end customer experience that calls forth customer loyalty requires formidable resolve, VoC and customer journey mapping are insufficient. Put different, dabbling won’t do; it occurs to me that most are merely dabbling.
I say, it is worth listening to David Maister once more:
There is no shame in aiming for competence if you are unwilling to pay the price for excellence. But don’t try to mislead clients, staff, colleagues or yourself with time-wasting, demoralising attempts to convince them that you are actually committed to pursuing the goal.
Relax, it’s ok to be just ok
As I get present to the world of business as it is and as it is not, I get present to the following and contradicts all the evangelising about customer focus, customer service, customer experience, customer relationships and customer-centricity:
1. Almost all businesses are unexceptional. They provide ok products (that do the job well enough). They provide OK digital real estate (websites, social media, apps, mobile). They provide OK stores. They hire OK people. They provide OK customer service – whether in stores or via the call-centres. And they generate an OK end to end customer experience, by default. As a result they do OK – they survive and make OK profits.
2. It is only against this background of OKness that the exceptional can and does show up. It is because almost all banks and insurance companies are ok that USAA glow so brig and htly. It is because most digital retailers are OK that Amazon shines brightly. It is because most high street retailers are OK that John Lewis and Waitrose (part of the John Lewis Partnership) shine brightly. It is because most organisations provide OK customer service that Zappos and Zane’s Cycles shine brightly.
From CRM to CEM: is it as easy as it sounds?
With CRM’ organisations took an’ inside-out’ approach to doing business with customers, though I doubt they knew that is what they were doing when they were doing it. When this didn’t work out as planned, some shifted to advocating an ‘outside-in’ approach and called it Customer Experience Management. I get that when it comes to writing or talking it is easy to shift from ‘inside-out’ to ‘outside-in’. What is it like in practice? What does it take to truly see the world through the eyes of our customers?
My experience is that really takes something to see the world through the eyes of another. My experience is that it is a huge ask to experience the world as another experiences it. My experience is that it is all to easy to be persuade oneself that one has shifted from an ‘inside-out’ view to an ‘outside-in’ view and yet be firmly stuck in an ‘inside-out’ view.
Aravind Eye Hospital: where ‘free’ costs 100 rupees!
What does it really take to see the world through the eyes of our customers? Allow me to share this example which I came across in a wonderful book, which I throughly recommend reading, called Infinite Vision:
While giving away free services might appear to be easy, Aravind’s experience proved to the contrary. “In the early days, we didn’t know better,”……”We would go to the villages, screen patients, and tell those who needed surgery to come to the hospital for free treatment. Some showed up, but a lot of them did not. It was really puzzling to us. Why would someone turn down the chance to see again?” Fear, superstition, and cultural indifference can all be very real barriers to accessing medical care, but Aravind’s leaders were convinced that there was more to it than that. After a few more years and several ineffective pilots of door-to-door counseling, they arrived at the crux of the issue. “Enlightenment came when we talked to a blind beggar,”….. When pressed on why he had not shown up to have his sight restored, the man replied, “You told me to come to the hospital. To do that, I would have to pay bus fare then find money for food and medicines. Your ‘free’ surgery costs me 100 rupees.”
…….. The research found that transport and sustenance costs, along with lost wages for oneself and accompanying family member, were daunting consideration for the rural patient. Aravind learned a valuable lesson: just because people need something you are offering for free, it does not mean they will take you up on it. You have to make it viable for them to access your service in the context of their realities.
Aravind Eye Hospital: it is not enough to see the world through customer eyes, you have to be moved to act
So that is the first step, genuinely seeing the world through the context of the lives of your customers. And it is makes no difference at all unless your organisations acts on what it has learnt. What did the folks at Aravind do? Let’s read some more from the book:
So Aravind retrofitted its outreach services to address the chief barriers. In addition to the free screening at the eye camps, patients were given a free ride to one of its base hospitals, where they received surgery, accommodation, food, postoperative medication, return transport, and a follow up visit in their village, all free of charge……
What difference did this make? Once more from the book:
“Once we did that, of course, our expenses went up,”…… “But more importantly, our acceptance rate for surgery went up from roughly 5 percent to about 80 percent.” For an organisation aspiring to rid the world of needless blindness, this was tremendously significant….
Aravind: two things are critical
What do the folks at Aravind say about this experience of theirs? Let’s listen and learn:
“In hindsight, we found two things are critical,”…..”You have to focus on the nonuser, and you have to passionately own the problem. You can address the barriers only when you own, not shift, the problems.” Paradoxically, that mindset led to what is perhaps the most collaborative outreach system the world of eye care has ever seen.
How does your organisation measure up? Do you really get how your organisation, your offer, shows up for your prospects? Do you really get how your customers experience your organisation across the customer journey? Is your leadership committed to doing what it takes to make it easy for prospects to buy from you? And for customers to keep doing business with you? Is your organisation up for passionately owning the problem or is it designed to hide and/or shift the problems on to customers and others?
Most of my work over the latter years has been around helping organisations to generate profitable revenues by doing a better job of addressing customer needs. In the course of my work I spend a lot of time with the folks responsible for marketing and sales.
One of the exercises that I do is to get the right people from customer touching functions such as marketing, sales and customer services in a workshop. And then I guide the folks through a structured SWOT type process for each significant customer segment.
The process starts of by asking the people in the room to identify what matters to the people in that customer segment. What are the jobs that these people are hiring the company’s ‘products’ to do for them? And what are the key outcomes that matter to the customers. This is terminology that is not typically familiar to the people in the room so there is some tension in the room. At some point someone in the marketing function will say “Aha, you are talking about customer needs!” and everyone relaxes.
Then the answers come. Almost always the top five tend to be: brand, product, quality, price, and service. Not particularly useful and I have learnt not to challenge people at this stage. So, I ask the people around the room to allocate 100 points between these five needs. This is where the fun starts . First, people really struggle to allocate weights to these five needs. And second, there tends to a lot of predictable disagreement. Marketers rate brand and quality highly. The Sales folks rate product and price highly. The folks from Customer Services tend to rate quality and service highly. And if there is senior, dominant, person in the room then slowly the people in the room come around to his/her way of thinking and weighting these top five needs. Notice something? How confident would you be that the people in the room are providing you with an accurate picture of what matters to customers?
Next, I ask the folks sitting around the large conference table to identify their key competitors. And once they have done so I create a grid. The columns are the company and its key competitors. The rows are the top five needs usually brand, product, quality, price and service. Now I ask the people in the room to evaluate how each of the competitors is doing in terms of meeting these five customer needs by giving marks out of 10. Once again the fun starts. People really struggle to come up with weighted answers. And there is considerable disagreement between people.
By the time we get to this stage the people around the room sigh a collective relief as if to say “Wow, that was hard work. We are so relieved that this is over and done with.”
At this stage I am hoping for someone to say “Going through that exercise has made me realise that I/we know so little about what matters to our customers. And how we compare to our competitors on what matters to our customers, as seen through the eyes of our customers. So we should go and get better answers by conducting research, talking with customers, talking with the people on the front line who actually are in touch with customers on a daily basis.” This rarely happens.
Instead, the people around the room have an air of assurance. They are visibly convinced that they know what matters to their customers. And how they compare to their competitors. It is as if the hard work of the exercise that I have taken them through hypnotises them into believing that the answers they have conjured up have to be true, are true.
So the biggest barrier to coming up with a powerful customer based strategy is simply this: ignorance and prejudice masquerading as knowledge/understanding of customers. The failure of people to say “We don’t know what really matters – jobs, outcomes, needs – to our customers. We don’t know how customers prioritise these jobs-outcomes-needs. We don’t know how our customers see us in comparison with our competitors. Let’s go and find out.”